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2 Racing Toward Assessment Innovation Mass valuation system Experience of Latvia

3 3 Content Property tax Real estate Cadastre Mass valuation system Future improvements

4 4 Fiscal Policy The Law „Law On Immovable Property Tax” (adopted in 1997, in force since 1998) Involved parties: – Ministry of Finance – taxation policy – Ministry of Justice (The State Land Service) – real estate mass valuation – Local Governments – determine of the land use, building and premise groups usage; determine the tax rate (the tax rate corridor (0.2 – 1.5%) in accordance with the principles laid down by law; tax administration and collection Tax payers: – Natural and legal persons, also non-residents – owners or persons with possession rights – Persons who are users of state or municipal real property All revenue from real estate taxation goes to budgets of local municipalities where real property is located. Property tax

5 5 Tax objects and tax base Tax objects Land Buildings Engineering structures Tax basis Cadastral value (mass value): For land – since the year 1998 For buildings – since the year 2007 For dwellings – since the year 2010 For engineering structures – since the year 2010 Property tax

6 6 Exemptions and reliefs Real property tax is not imposed on:  Municipality land that is not leased  Land owned by diplomatic or consular representations of foreign countries  Public waters, land under public roads, streets, railroads tracks  Land in protected nature territories, in which economic activity is forbidden with the law  Land that covers renewed or planted forest stands (young forest stands)  Graveyards and real estate owned by religious organizations, which are not used for economic activities  Engineering structures owned by the state and municipality and engineering structures that are not used for economic activity  National sports facility  Subsidiary buildings of dwelling houses  Buildings and engineering structures for agricultural production  Buildings of national armed forces, prison, police, border guard, fire and rescue services, as well as of state security institutions  Buildings of institutions financed by the state budget, buildings for education, health, social care, museums, libraries, buildings used for the need of environment protection Individual residential real property of politically repressed persons - 50 %; Municipalities may grant relief up to 90% for separate category of taxpayers based on regulations issued by each municipality. In accordance with the Law, is intended to apply a tax credit of 50% of the estimated tax for residential property (house or apartment and the land under jurisdiction), which is declared in large families – with at least 3 children Property tax

7 7 Tax rate for land – 1.5% for buildings used for the purpose of economic activity– 1.5% for dwellings 0.2% - 0.6% regarding to the part of the value of the building or flat: – 0.2% - value below EUR; – 0.4% - part of value from EUR till EUR; – 0.6% - part of value above EUR. Tax rate above 1.5% will be set only for properties that are not managed: – building slums, which degrades the environment and threaten public safety, – as well as for uncultivated agricultural land Property tax

8 8 Appeals Taxpayer can complain: to local municipalities (relating to tax amount, terms of payments, land use of property, object); to State Land Service (relating to mass valuation procedures, as well as in situation of wrong determination of mass value, or wrong Cadastre data). Property tax

9 9 Cadastre IS  Land:  textual part – since 1992  graphical data – since 1995  Buildings:  textual part – since 1996  graphical data – since 1999  Groups of premises – since 2000 Real estate Cadastre Real property objects Textual part of Cadastre Graphical part of Cadastre Land parcel (units) % Buildings % Groups of premises

10 Dynamics of registration Real estate Cadastre

11 Data registration Land:  Registration based on restitution and privatization documents during land reform  Cadastral survey of land parcels  Digital data from local & state authorities  Paper and e-documents from local & state authorities Building:  SLS performed mass survey of buildings (0.8 million)  Cadastral survey of buildings  Land parcel survey  Data registration from declarations submitted by building owners  Data registration from declarations submitted by local municipality  Building Information System Real estate Cadastre

12 Data in Cadastre Real estate Cadastre Real property 63 data fields  cadastral value  structure of the real estate  Ownership/tenure  Land Register data  documents Groups of premises (apartments) 73 data fields  cadastral value  total area  type of premise  area of premise  height of premise Buildings and constructions & utilities 103 data fields  cadastral value  type of building  area, building site  facilities  constructive elements Land parcels 72 data fields  total area  cadastral value  types of land use  legal purpose of use  restrictions  land surveying data Land property Building property Residental property Cadastre 3

13 E-services for private customers Real estate Cadastre Data distribution portal  «My data in Cadastre»;  Geospatial data browsing and downloading ;  Thematic maps;  Selection of data by parameters;  The order status tracking and new e-service ordering Mobile application kadastrs.lv  The same as the data distribution portal Latvian State institutions and municipalities e-service portal  Cadastre and State Address Register browsing 24/7  Access to spatial data and maps online  Necessary survey information for land surveyors  Other e-services The Single Geospatial Information and Service Point  Free cadastral map browsing;  Data downloading without contractual obligations Data distribution through WEB services  Text data WEB services (XML)  Spatial data WEB services (WMS, WFS, ArcGIS)

14 Mass valuation Mass valuation system The mass valuation takes place according unified principles for the entire country and is based on the real property market information Normative regulations:  National Real Estate Cadastre Law;  Regulations Regarding Cadastral Assessment. (1998 – 2006 – Law On Immovable Property Tax) Mass valuation objects:(all objects registered in the Cadastre IS)  land  buildings  engineering constructions Value is used for:  Real property tax  Stamp duty from the sale/transfer of property  Privatization, rents of state or municipality land, etc

15 Mass valuation system 15 Cadastral date (land and building) Value base Value calculation Mass (cadastral) assessment  All property on January, 1st (real property tax)  Calculation process ~ 48 hours  Value base changes - two years Mass (cadastral) assessment  All property on January, 1st (real property tax)  Calculation process ~ 48 hours  Value base changes - two years Mass (cadastral) values calculation in the Cadastre IS Valuation models Cadastral value changes  Online – changing Cadastre object data Cadastral value changes  Online – changing Cadastre object data Value zoning  Rural properties (zonings of agricultural land and forest land)  Residential properties  Industrial properties  Commercial and public property Base value

16 Mass valuation system Valuation models  Location (zone)  Land use  Land area  standard plot  Restrictions  Location  Land cover (arable land, forests, waters,...)  Quality of agricultural land  Quality of forest land  Restrictions Building land Agricultural land, forest land

17 Mass valuation system Valuation models All buildings  Location  Use  Building area  Physical condition  Encumbrances + Detached and semi-detached houses  Different areas (indoor, open space, basement …)  Facilities arrangement (electricity, sewerage …) + Apartment buildings and multi-functional building  The use of premises  For apartment - floor

18 Mass valuation system Changes in process  Changed value revision cycle – cadastral values must be revised once in two years  Defined value reference date (valuation date) – 1 July – one and a half year before values will come in force for taxation  Defined value level – 85% of market value  Public involvement – taxpayers will be able to submit a complaint before approval procedure in the Cabinet of Ministers

19 Future improvements Now (Municipality) Future improvements Determination of land use Future (State Land Service) Cadastre IS Territory Planning IS Restricted Territories IS Territory Planning IS – the permitted use – settlements; building density (intensity); allowed height/floor;… Restricted Territories IS – communication, roads, restrictions (particularly, construction)… Cadastre IS – land parcel borders, area, buildings location, building type, building area … 119 municipalities shall take a decision Complex appeal process Often land use objectives are not changing Automated IT system Manual - Administrative acts

20 Future improvements building data collection Now: 68% MAX survey = outside + inside 32% MIN (till 2003) survey = outside Future – Remote sensing data analysis Owners declaration

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